Koo v Chief Commissioner of State Revenue

[2025] NSWCATAD 252

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Koo v Chief Commissioner of State Revenue [2025] NSWCATAD 252

Hearing dates:

18 September 2025

Date of orders:

7 October 2025

Decision date:

07 October 2025

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

EA MacIntyre, Senior Member

Decision:

(1)   The Tribunal extends the time for the Applicant to apply for administrative review to 2 May 2025.

(2)   The assessment under review is confirmed.

Catchwords:

REVENUE LAW - State taxes - surcharge purchaser duty - exemption - residence requirement assessment - objection - appeal

REVENUE LAW - interest - penalties - reasonable care -whether tax default due to matters beyond control of taxpayer - personal circumstances - remission

ADMINISTRATIVE LAW - reviewable decision - correct and preferable decision - Civil and Administrative Tribunal - application for administrative review out of time - leave to allow application

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

Duties Act 1997 (NSW)

Taxation Administration Act 1996 (NSW)

Cases Cited:

Bayton Cleaning Co Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 657

Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126

Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19

Commissioner for ACT Revenue v G Kalsbeek Pty Ltd [2015] ACAT 90

Continuum Recruitment Pty Ltd v Chief Commissioner of State Revenue [2024] NSWCATAD 38

Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249

Loomes v Chief Commissioner of State Revenue [2014] NSWCATAD 133

Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227

RVO Enterprises Pty Ltd ATF the R M O’Mara Family Trust v Chief Commissioner of State Revenue [2004] NSWADT 64

Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317

Tacey v Chief Commissioner of State Revenue [2016] NSWCATAD 255

Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21

Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54

Xin v Chief Commissioner of State Revenue [2024] NSWCATAD 333

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Heung Shing Peter Koo (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Counsel:
S T Hanscomb (Respondent)

Solicitors:
Ma & Company Solicitors (Applicant)
Crown Solicitor (Respondent)

File Number(s):

2025/00169358

Publication restriction:

None

REASONS FOR DECISION

1. These proceedings arise out of a dispute between Heung Shing Peter Koo (“Applicant”) and the Chief Commissioner of State Revenue (“Respondent”) over assessments of penalty tax and interest. The penalty tax and interest were assessed as a result of surcharge purchaser duty not being paid on time.

2. The Applicant claims that the penalty tax and interest should not be payable.

3. The Respondent, however, says that the Applicant did not take reasonable care. The Respondent also says the circumstances of late payment were not outside the control of the Applicant. For these reasons, the Respondent submits that penalty tax and interest is assessable.

4. The matter for determination is whether the penalty tax and interest assessed should be determined as not being payable or reduced.

Background

5. The Applicant on 19 December 2019 obtained a visa that gave him the status of a permanent resident of Australia. He was not at any relevant time an Australian citizen.

6. On 8 July 2020, the Applicant as purchaser, executed a contract for the sale of land for residential property in NSW. At the time of executing the contract, the Applicant lived in Hong Kong SAR.

7. On 6 August 2020, the Applicant executed a “Purchaser/Transferee declaration” - individual form. He declared his then current residential address in Hong Kong and that he was a “foreign person” because he was not an Australian citizen and not a person who was ordinarily resident in Australia.

8. He further declared that he was an “exempt permanent resident” who would occupy the property as his principal place of residence for a continuous period of 200 days within the first 12 months after the relevant liability date, being the date of contract.

9. The contract settled on 28 September 2020 and the Applicant became the registered proprietor on and from that date.

10. In 2020, there were border closures due to the COVID 19 Pandemic and a disruption to life in Hong Kong on account of protest activity.

11. The Applicant entered Australia on 5 August 2024, having been overseas continuously for five years. The Applicant departed from Australia on 13 August 2024. There was no record of him having returned to Australia since that date, as at the time of hearing of this matter.

12. Following an investigation, on 1 October 2024, the Respondent assessed the Applicant to surcharge purchaser duty.

13. On 27 November 2024, the Applicant lodged an objection to the assessment. On 16 December 2024, the Respondent notified the Applicant that he had determined the objection by disallowing it.

14. On 2 May 2025, the Applicant commenced proceedings in the Civil and Administrative Tribunal (“Tribunal”) for administrative review of the disallowance of his objection. Those proceedings were commenced outside the period allowed under s 99(1) of the Taxation Administration Act 1996 (NSW) (“Administration Act”) for seeking administrative review by the Tribunal.

15. Divorce proceedings between the Applicant and his then wife had commenced in July 2020. These proceedings ran until October 2021.

16. The Applicant had suffered from ill health. The earliest document in evidence showing his ill health dates from late 2021. His son has also suffered from ill health.

17. The Applicant was without employment and was suffering financial hardship. He said that this had been his situation for some years.

Applicant’s right of review

18. Where tax has been assessed, s 86 of the Administration Act, allows rights of objection to a taxpayer dissatisfied with an assessment. This is an internal review process under which the Chief Commissioner of State Revenue, the Respondent in these proceedings, must consider and determine the objection (s 91 of the Administration Act).

19. A taxpayer who is dissatisfied with the decision made upon the Respondent’s determination of an objection, may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 (“NSW”) (“ADR Act”)of the decision of the Chief Commissioner of State Revenue.

20. These circumstances have arisen in the present matter as set out in the background above, so bringing the matter within the jurisdiction of the Tribunal.

21. The onus of proving his case lies with the Applicant (s 100(3) of the Administration Act).

22. The Tribunal, dealing with the taxpayer’s application, may do one or more of the following under s 101 of the Administration Act:

“(a) confirm or revoke the assessment or other decision to which the application relates,

(b) make an assessment or other decision in place of the assessment or other decision to which the application relates,

(c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid,

(d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision,

(e) make any further order as to costs or otherwise as it thinks fit.”

Leave to appeal

23. An application for review following a determination by the Respondent of an objection must be made not later than 60 days after the date of issue of the notice of the Respondent’s determination of the objection (s 99(1) of the Administration Act). The Applicant has made his application for administrative review outside the 60-day period allowed under s 99(1) of the Administration Act. Section 99(1), however, provides that the Tribunal may allow a person to apply for a review after the 60-day period. Additionally, s 41 of the Civil and Administrative Tribunal Act 2013 (NSW) (“NCAT Act”), allows the Tribunal to extend the time for doing anything under the Administration Act.

24. The Applicant sought the extension of time required for him to apply for administrative review out of time. The Respondent neither consented to nor opposed the Applicant’s application for an extension of time.

25. I think that the Applicant’s situation, including his ill health and financial hardship, on balance, explains adequately his delay in commencing proceedings. The Tribunal, in these circumstances, allows the Applicant to make his application for administrative review out of time and extends the date for making application to the date he applied to the Tribunal for administrative review, namely 2 May 2025.

Consideration

Liability for surcharge purchaser duty

26. Surcharge purchaser duty is imposed under Chapter 2A of the Duties Act 1997 (NSW) (“Duties Act”). It applies to certain foreign persons who acquire residential property in New South Wales. That the Applicant was liable for surcharge purchaser duty was not contested.

27. Exemption from surcharge purchaser duty is allowed under s 104ZKA of the Duties Act to certain permanent residents. It provides as follows:

“104ZKA   Exemption for certain permanent residents in respect of principal place of residence

(1)  No surcharge purchaser duty is chargeable on a transfer, or an agreement for the sale or transfer, of residential-related property if each transferee under the transfer or agreement who would otherwise be liable to pay that duty is an exempt permanent resident.

(2)  A transferee under a transfer or agreement is an exempt permanent resident if—

(a)  the transferee is a permanent resident when a liability for duty charged by Chapter 2 on the transfer or agreement arises (or would arise but for a concession or exemption from duty under that Chapter), and

(b)  the Chief Commissioner is satisfied that the transferee intends to use and occupy the residential land to which the residential-related property relates as a principal place of residence in accordance with the residence requirement.

……

(4)  The residential land must be used and occupied by the exempt permanent resident as his or her principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date. This requirement is referred to as the residence requirement.

(5)  The liability date is the date on which liability to surcharge purchaser duty first arose in respect of the share in the residential-related property transferred, or agreed to be transferred, to the exempt permanent resident.

(6)  If the residence requirement is not complied with in relation to the residential land, the Chief Commissioner must assess or reassess the surcharge purchaser duty chargeable on the transfer or agreement as if the exemption under this section had never applied”.

28. The Applicant accepts that he failed to satisfy the “residence requirement” set out in s 104ZKA(4). This is a requirement for the taxpayer to use and occupy the relevant residential land as their principal place of residence for a continuous period of at least 200 days within the first 12 months after the liability date. The uncontested evidence was that the Applicant was out of Australia when the required 200-day period had to be satisfied, during the year commencing 8 July 2020. He was out of Australia for the entirety of that year.

29. The Duties Act gives no power to the Tribunal to waive or modify the “residence requirement”. In these circumstances, the Applicant accepted that he was liable for surcharge purchaser duty.

30. If the “residence requirement” is not complied with, the Respondent must assess or reassess the surcharge purchaser duty chargeable on the relevant transfer or agreement, as if the exemption under s 104ZKA had never applied.

31. By 20 December 2020, it had become clear that the residence requirement had not been met and could not be satisfied. This is because the Applicant had not yet taken up residence at the property and there were no longer 200 days left in the year commencing 8 July 2020 to allow the “residence requirement” to be met.

32. The Applicant, having made a declaration on 6 August 2020 that he intended to comply with the residence requirement, did not inform the Respondent that he had failed to comply with it. He should have done this by 20 December 2020, once he knew that the residence requirement had not been met and could not be satisfied.

33. The tax default in issue was the failure by the Applicant to pay by the due date in accordance with the Duties Act, the whole of the surcharge purchaser duty that he was liable to pay. The due date for discharge of the liability to pay surcharge purchaser duty was three months after the date of contract. That such a liability had arisen was established no later than 20 December 2020 by reason of the Applicant’s failure to meet the residence requirement. It remained unpaid in full until 3 March 2025, in circumstances where the Applicant had not informed the Respondent of his failure to satisfy the residence requirement when he should have.

34. After assessment of tax and following negotiation of a payment plan, by 3 March 2025, the Applicant had paid the surcharge purchaser duty owing by him.

35. It was not contested that the Applicant was liable for surcharge purchaser duty and had not informed the Respondent that he had not complied with the residence requirement once he knew that he had failed to do so. What is in dispute is the Respondent’s assessment of penalty tax and interest.

Penalty tax

36. Provisions dealing with penalty tax are set out in the Administration Act. Section 27(1) of the Administration Act prescribes the rate of penalty tax. It provides as follows:

“27   Amount of penalty tax

(1)  The amount of penalty payable for a tax default is, subject to this Division—

(a)  25% of the amount of tax unpaid, or

(b)  if the taxpayer is a significant global entity within the meaning of the Income Tax Assessment Act 1997 of the Commonwealth—50% of the amount of tax unpaid”.

37. Penalty tax is assessable at the default rate of 25%. Sections 27(2) and (3), 28, 29 and 30 provide for certain circumstances where the default rate of penalty tax of 25% set out in s 27(1) can be reduced or increased, depending on the application of various considerations set out in those provisions. The actual rate at which penalty tax was assessed was 20% following such a reduction.

No penalty tax

38. If the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with a taxation law, s 27(3)(a) allows for a determination that no penalty tax applies. Grounds for such a determination may also arise if a tax default occurred solely because of circumstances beyond the taxpayer’s control (s 27(3)(b)).

39. Section 33 makes further provision for the remission of penalty tax. Section 33, as it applies from 1 February 2024, provides as follows:

“33   Remission of penalty tax

(1)  The Chief Commissioner may, in such circumstances as the Chief Commissioner considers appropriate, remit penalty tax by any amount.

(2)  The imposition or remission of interest is not relevant to the imposition or remission of penalty tax”.

40. The Respondent justifies the assessments of penalty tax at the rate of 20% on the basis that, in his submission, the tax default in question occurred because the Applicant did not take reasonable care. He also says that the tax defaults did not occur because of circumstances outside the control of the Applicant. The Applicant disagrees with these submissions.

41. The rate of 20% at which penalty tax was assessed represents a reduction of the rate of 25% otherwise applicable. The Respondent said that he made the reduction in recognition of the Applicant’s admissions with respect to the residence requirement after the Respondent’s investigation commenced.

Did the Applicant take reasonable care?

42. The first question for determination is whether the Applicant took reasonable care in dealing with his obligation to pay surcharge purchaser duty. Where reasonable care has been taken, s 27(3)(a) of the Administration Act may allow for a determination that penalty tax is not payable. It provides as follows:

“(3)  The Chief Commissioner may determine that no penalty tax is payable in respect of a tax default if the Chief Commissioner is satisfied that—

(a)  the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with the taxation law”.

43. What is “reasonable care” to comply with taxation obligations has been described as follows in Qualweld Australia Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 227, following RVO Enterprises Pty Ltd ATF the R M O’Mara Family Trust v Chief Commissioner of State Revenue [2004] NSWADT 64, at [95]:

“In each case, it is essentially a question of fact whether the taxpayer has taken reasonable care in attending to its tax obligations. Factors that would indicate that a taxpayer took reasonable care include reasonable attempts to comply with the tax law, reasonable professional and other enquiries to ensure compliance, reliance on professional advice or on official published views of the tax law. Factors which indicate that a taxpayer failed to take reasonable care include oversight or forgetfulness to meet with obligations, failure to maintain adequate records and procedures to prevent errors from occurring, not seeking professional advice and errors in complying with the law.”

44. The Applicant in the present case received advice from a solicitor before settlement of the contract in issue, including advice that he had to comply with the residence requirement of 200 days. That advice was contained in an email from his solicitors dated 13 August 2020, to which the Applicant replied on the same day, making reference to the 200 day residence requirement.

45. In Xin v Chief Commissioner of State Revenue [2024] NSWCATAD 333, the facts under consideration involved a person who said she would meet the residence requirement but failed to do so, and then did not notify the Chief Commissioner of the default although there was no impediment to her doing so. Frost SM said that to “excuse such a case from the penalty, or even to reduce the penalty when there is nothing unusual about those bare facts, would be to undermine the very purpose of the penalty provision in the first place”, at [54].

46. The circumstances of the present case are not of a kind that allow for a conclusion that the Applicant took reasonable care. His solicitor advised him of and he knew about the 200-day residence requirement. He told his solicitor on 13 August 2020 that he would “make my own arrangements for taking 200 days residency requirements”. However, despite having received this advice from his solicitor, the Applicant did not voluntarily inform the Respondent prior to the Respondent’s investigation that he had not met the residence requirement, after it had become clear that the residence requirement had not been and could not be satisfied. The Applicant did not inform the Respondent that he had failed to meet the residence requirement until 5 September 2024. This occurred only after the Respondent had commenced an investigation.

47. The Tribunal understood the Applicant to say that his own ill health and that of his son impeded his ability to manage his affairs. However, these are circumstances that on the evidence arose after 2020 (see [52] below) and consequently, do not have a bearing on determination of whether the Applicant took reasonable care in mid-2020 at the time of contracting and in December 2020 when he should have informed the Respondent about his non-compliance with the residence requirement.

Were the tax defaults beyond the control of the Applicant?

48. The second question for consideration by the Tribunal is whether circumstances outside the control of the Applicant resulted in the relevant tax defaults. Section 27(3)(b) of the Administration Act may, in this case, allow for a determination that no penalty tax is payable. It provides as follows:

“(3)  The Chief Commissioner may determine that no penalty tax is payable in respect of a tax default if the Chief Commissioner is satisfied that—

……….

(b)  the tax default occurred solely because of circumstances beyond the taxpayer’s control (or if a person acted on behalf of the taxpayer, because of circumstances beyond either the person’s or the taxpayer’s control) but not amounting to financial incapacity”.

49. Section 27(3)(b) applies only where the relevant tax default occurs “solely” because of circumstances beyond the taxpayer’s control. A similar provision fell for consideration in Commissioner for ACT Revenue v G Kalsbeek Pty Ltd [2015] ACAT 90. The ACT Administrative Tribunal said, at [35]:

“In order for the provisions of section 31(6)(b) to operate to avoid penalty tax, the cause of that failure to pay tax must first be identified. An outcome (the failure to pay tax) may have several causes, depending on the length of time of the obligation. This appeal tribunal must then be satisfied that the identified cause (or causes, where there are more than one) is the ‘sole’ cause of the failure. Unless all of the causes of the failure are identified and (in the case of a single cause), it is beyond the taxpayers control, or (in the case of multiple causes), all are beyond the taxpayers control the relief under section 31(6)(b) is not available. This necessarily involves consideration of all of the factors which the evidence shows contributed to the issue of the failure to pay payroll tax”.

50. The Tribunal in Continuum Recruitment Pty Ltd v Chief Commissioner of State Revenue [2024] NSWCATAD 38, in considering whether medical problems and workload issues “solely” caused a tax default, said, at [52]:

“While the Tribunal accepts Mr Doyle’s evidence that his daughters suffered from a medical condition which placed financial and emotional strain on the family, there is no evidence as to the nature or timing of their illnesses or how this impacted Mr Doyle’s ability to comply with the Applicant’s obligations. Nor is there any evidence as to the nature or extent of Mr Doyle’s own illness or how that may have affected his ability to meet his obligations. On the state of the evidence the Tribunal simply cannot be satisfied that these factors together with Mr Doyle’s increased workload as a result of the pandemic, which the Tribunal accepts were circumstances beyond the Applicant’s control, solely caused the Applicant’s tax default. By Mr Doyle’s admission, he “wrongly prioritised” his obligations and should have engaged someone to assist the Applicant meet its obligations. As the ACT Civil and Administrative Tribunal said in Commissioner for ACT Revenue v G Kalsbeek Pty Ltd [2015] ACAT 90 at [42], factors such as those are clearly part of the cause for the Applicant’s failure to comply with its obligations and cannot be regarded as being beyond the control of the Applicant though its director”.

51. The evidence does not show that the tax default in question occurred for reasons outside the control of the Applicant, whether “solely” on account of such reasons or otherwise. While I accept that the Applicant underwent difficulties during the last 5 years, there is insufficient evidence that these circumstances left the Applicant in a position of being unable to comply with his obligations, including informing the Respondent when he had not satisfied the residence requirement.

52. I understood the Applicant to say that his own ill health and that of his son impeded his ability to manage his affairs including attending to tax compliance. The Applicant’s ill health is first evidenced by medical documents dated October 2021. This was preceded by documents evidencing tests dated 5 October 2020. His son’s health issues are first evidenced in medical documents dated September 2024.

53. Evidence of the ill health of the Applicant and his son are found in documents dating from the period after when the Applicant had failed to satisfy the residence requirement and became liable for surcharge purchaser duty. I am unable in these circumstances to find that the ill health of the Applicant or his son or other personal circumstances prevented the Applicant from complying with his taxation obligations.

54. The Applicant has also not established that border closures due to the COVID 19 Pandemic, protest activity in Hong Kong or divorce proceedings commenced in July 2020 prevented him from notifying the Respondent and paying the surcharge purchaser duty he owed, once it became clear at the end of 2020 that the tax was payable.

55. For the above reasons, I cannot be satisfied that the Applicant’s tax defaults occurred solely (or otherwise) because of circumstances outside his control. Accordingly, I do not see any basis for a determination under s 27(3)(b) that no penalty tax is payable.

Remission under s 33 of the Administration Act

56. Section 33 of the Administration Act contains a broad discretion to remit penalty tax. The discretion allowed under that provision is not subject to the limits set out in s 27 (Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126). Nevertheless, that discretion cannot be exercised in a way that defeats the fundamental legislative objectives of the penalty scheme. Ward CJ in Equity (as she then was) has said that except in “special circumstances”, the general discretion under s 33 should not be exercised beyond the limits in ss 27(3) and 29 when the circumstances giving rise to a remission under s 27(3) of the Administration Act have not been made out (Bayton Cleaning Co Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 657, at [301]).

57. The Respondent’s submission was that there were no special circumstances warranting a remission of the penalty tax. Where the Applicant had not taken reasonable care and had not provided any valid basis for failing to comply with the obligations to inform the Respondent, the Respondent’s submission was that it would not be consistent with the objective of the penalty regime in the Administration Act for penalty tax to be remitted.

58. I accept the Respondent’s submission that there are no special circumstances or other circumstances to warrant a remission of penalty tax under s 33. The absence of reasonable care on the part of the Applicant, though not determinative, is a relevant matter going against the exercise of discretion under s 33. Further, remission of penalty tax would not be consistent with the general legislative purpose. That purpose is to allow for the remission of penalty tax where reasonable care has been taken or where a tax default occurred because of circumstances outside the control of the taxpayer.

Rate of penalty tax

59. The rate at which penalty tax has been assessed is 20%. This is less than the default rate of 25% set out in s 27 of the Administration Act. That rate can be varied upwards or downwards in particular circumstances. Where disclosure of a tax default has been made before commencement of an investigation, this is a circumstance where a reduction in the rate of penalty tax can be made. The Respondent reduced the default rate of 25% to 20% because of the Applicant’s concession that surcharge purchaser duty applied and his cooperation with the Respondent in so doing after the Respondent’s investigation commenced. I agree that the reduction made is appropriate.

Interest

60. The Respondent can assess interest at both the market rate and the premium rate (s 21 and 22 of the Administration Act). The assessments made included interest calculated at both rates.

61. The Respondent, however, has certain statutory powers to remit interest (s 25 of the Administration Act). That power is discretionary. The Chief Commissioner may issue guidelines setting out how interest must be remitted. If guidelines are issued, interest must be remitted only in accordance with the guidelines.

62. Section 25 in its current form came into effect on 1 February 2024. The provisions allowing for the use of guidelines for remittal of interest took effect from that date. Guidelines have been issued with effect from 1 July 2025 as set out in “TAA 001: Remission of Interest Guidelines”, but do not apply in the present case because the objection in this matter pre-dates the commencement date of 1 July 2025.

63. The Respondent sets out in Practice Note CPN 024 his earlier guidelines as to how he will exercise his powers of remission. These guidelines were issued in June 2022. Relevantly, they provide as follows:

“When a tax default occurs, interest is calculated on the amount of unpaid tax calculated on a daily basis from the end of the last day for payment until the day it is paid.

The Chief Commissioner may remit the market rate component or the premium component of interest, or both, by any amount depending on the circumstances affecting the tax default. Where the remission of interest is warranted, the amount remitted will, generally, be either both the premium and market rate or the premium rate only.

……..

Circumstances outside the control of a taxpayer

Where there is evidence that the default was outside the control of the taxpayer (or their representative), the Chief Commissioner may remit interest.  Events over which a taxpayer has no control include but are not limited to:

a. natural disasters such as fire or flood

b. computer system breakdowns including third party systems such as electronic funds transfer systems

c. illness or death of a principal taxpayer

d. Revenue NSW fault affecting receipt of payment, including processing problems

e. circumstances where it is impossible to lodge or pay on time (excluding financial incapacity including hardship).

In cases of financial incapacity, taxpayers may apply for relief in the form of an extension of time to pay, including an instalment arrangement.

Reasonable care taken by the taxpayer

Where there is sufficient evidence to prove that the default was within the control of the taxpayer (or their representative), but reasonable care has been taken to ensure the payment of the tax, the Chief Commissioner will usually remit the premium rate component of the interest. Events that may indicate that the taxpayer took reasonable care include (but are not limited to):

a. being honest and forthright when dealing with the Chief Commissioner

b. cooperation with the Chief Commissioner

c. the default is attributable to calculation errors

d. making diligent efforts to understand and comply with the law

e. maintaining appropriate and proper recording systems in accordance with normal practice i.e., systems that minimise the risk of tax default, allow reconciliation of the tax paid or payable with returns required to be lodged and fulfil the taxpayer’s obligation under the taxation laws to maintain records for the purposes of Revenue NSW investigations or audits

f. taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements

g. applying any relevant revenue rulings in good faith

h. seeking professional advice or private rulings for uncertain or complex matters where no revenue ruling applies, or where circumstances differ from those described in a revenue ruling

i. acting promptly to seek advice or provide information once made aware, from any source, that the taxpayer might have a tax liability

j. the taxpayer has used and reasonably relied on data, statements or other information provided by a third party.

Meeting one or more of these examples does not necessarily mean that reasonable care has been taken; all relevant factors leading to the tax default will be taken into consideration.

Note: Remission of the premium rate will only occur in special circumstances”.

64. Bathurst CJ in Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126 considered the reach of the power in s 25 of the Administration Act to remit interest. His Honour did not think there was a relevant limit on the power of the Chief Commissioner to remit interest in s 25 of the Administration Act.

65. Each of the components of interest assessed, however, requires specific consideration. Those components are made up of interest assessed at the market rate and interest assessed at the premium rate.

66. The rationale for the market rate of interest is described as follows in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP 19 and why it should be waived only rarely. The Administrative Decisions Tribunal said, at [60]:

“In our view the primary interest rate (the market rate component) is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from the time it was due. So a rate is set which fluctuates, and is connected to an external rate, the Reserve Bank’s Accepted Bill rate. This, as we see it, is a component that could rarely, if ever, be waived as otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time. The Tribunal made the observation at [50] that to justify any remission of the market rate component of interest, it would be necessary to show that in some way the Commissioner contributed to the default. We agree with this observation”.

67. The Respondent, in CPN 024, contemplates that where the circumstances of non-payment were outside the control of the taxpayer, remission of interest assessed at the market rate may be justified. The initial question is whether the relevant tax default arose as a result of circumstances outside the control of the Applicant. I have found that the tax defaults in issue did not occur as a result of circumstances outside the control of the Applicant, whether solely due to such circumstances or otherwise, for the reasons set out at [51]- [55] above. Further, there was nothing in the evidence to show that factors of the kind described at [63] above or other factors outside the control of the Applicant resulted in the tax default in issue.

68. The Tribunal in Incise Technologies laid emphasis on fault on the part of the Respondent as grounds for remission. This was a factor that was also found to be of relevance in Trust Co. of Australia v Chief Commissioner of State Revenue [2002] NSWADT 21, at [27].

69. It is well accepted that interest at the market rate should rarely if ever be waived, because to do so would be to devalue the amount of tax payable. I see no reason to depart from this principle in the present case in light of the matters set out above, in particular because the tax default did not occur as a result of circumstances outside the Applicant’s control, whether solely as a result of such circumstances or otherwise and because of the absence of fault on the part of the Respondent. I am unable to identify any other grounds for the remission of the market rate of interest. It follows that the assessment of interest at the market rate is affirmed.

70. The purpose of the premium rate of interest differs from that of the market rate of interest. While the market rate compensates the Respondent for the time value of money that is paid late, the premium rate of interest extracts from the taxpayer something more. It is in the nature of a penalty (Southern Cross Community Health Care Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 1317, at [443], per Emmett AJA). That difference informs the varying approaches to remission of each kind of interest. While remission of interest assessed at the market rate should be rare, the circumstances in which interest assessed at the premium rate can be remitted are not as restrictive.

71. There is no express requirement in s 25 for considerations of ”reasonable care” to be taken into account in determining whether to remit interest (unlike in the case of s 27 applying to the remission of penalties as discussed above). The Respondent’s guidelines, however, state that “taking reasonable steps to be aware of and comply with his/her taxation obligations and to be familiar with the legislative requirements” will be a matter that goes to whether remission should be made.

72. That taking reasonable care is a consideration in determining whether or not interest at the premium rate should be assessed, alongside various other considerations, is well accepted (Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249, at [106])

73. The question of whether the premium component of interest should be remitted, however, is not limited to consideration of whether or not a taxpayer has taken reasonable care. In Wan v Chief Commissioner of State Revenue [2025] NSWCATAP 54, the Appeal Panel said, at [81] – [82]:

“Factors such as whether a taxpayer took reasonable care or whether there were exceptional circumstances are not irrelevant and the Tribunal was entitled to place great weight on them. Nevertheless, remission of interest is not an ”all or nothing” exercise. Further, the degree of a taxpayer’s culpability is material. An assessment of the appellant’s culpability is not limited to whether he took reasonable care or whether there were exceptional circumstances.

It follows that by asking only whether there was reasonable care or exceptional circumstances and not asking whether there were any personal circumstances of the appellant apparent from the materials before it, relevant to establishing the degree of culpability other than the failure to meet his statutory obligations that may warrant remission, the Tribunal asked the wrong question”.

74. I do not think that the personal circumstances of the Applicant can warrant a reduction or remission of the premium rate of interest where the matters he relies upon to excuse his non-compliance arose after he knew that he had not complied with the residence requirement and knew that he was required to pay tax (see [53] above). There is also no evidence that border closures, unrest in Hong Kong or his divorce prevented him from notifying the Respondent and paying surcharge purchaser duty, as he was required to do (see [54] above).

75. I have found that the Applicant’s tax default did not arise from circumstances outside his control. There was also no fault on the part of the Respondent. I have also found that the Applicant did not take reasonable care. These matters also go against the remission of interest assessed at the premium rate.

76. I do not think that a reduction in the premium rate of interest is warranted in circumstances where the Applicant obtained advice and knew that he had to comply with the residence requirement to obtain exemption and knew that he had to inform the Respondent if he did not comply, but failed to do so.

77. The Applicant says that he intended at the time of the contract to satisfy the residence requirement and that this should allow for a remission of interest. However, the evidence is that the Applicant was outside Australia at the time and did not come to Australia until 2024. Even if border closures were in place in 2020 preventing the Applicant from travelling to Australia, his absence from Australia was a long one after borders had been reopened. These circumstances sit uneasily with the proposition that at the time of the contract, the Applicant had a well-founded intention to come to Australia and satisfy the residence requirement.

78. In Xin, the taxpayer was in Australia at the liability date and claimed 197 days residence, falling short of the required 200-day period by 3 days. The Tribunal found that she could not have known at the liability date that she would not comply with the residence requirement until some months later when she left Australia. The Tribunal in these circumstances remitted some of the interest assessed.

79. Unlike in Xin, where the taxpayer at the date of declaration had some basis for believing that she could satisfy the residence requirement, the Applicant’s long absence from Australia in the present case, raises doubt as to whether or not the Applicant had a well-founded basis for making the declaration he made. I do not, in the circumstances, think that grounds for remission of the kind arising in Xin are found in the present case.

Hardship

80. The Applicant claimed financial hardship, having lost his employment and remaining without work for a period of years. The Tribunal does not have jurisdiction to determine the matter on the basis of hardship (Loomes v Chief Commissioner of State Revenue [2014] NSWCATAD 133). Division 5 of Part 10 of the Administration Act establishes and empowers a Hardship Review Board to deal with cases in which the exaction of the full amount of tax would result in serious hardship for the person or the person’s dependants. The remaining avenue available to the Applicant would therefore be an application to the Hardship Review Board.

Conclusions

81. The onus is on the Applicant to show, on the balance of probabilities, that the evidence establishes the findings of fact necessary to enable the Tribunal to remit penalty tax and interest. He has not done so. For the reasons set out above, the Respondent’s assessment under review is confirmed.

Orders

1. The Tribunal extends the time for the Applicant to apply for administrative review to 2 May 2025.

2. The assessment under review is confirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 07 October 2025